Articles by Ketan Sonalkar

Polycab India Ltd.    
26 Nov 2021
2361.55
1.29%
Polycab - Wired up to hold on to its number one spot

By Ketan Sonalkar

Polycab India is the largest manufacturer of wires & cables in India. The company also entered the fast-moving electrical goods (FMEG) space in 2014 and is growing through new product launches and dealer additions across the country.

Since its listing on stock exchanges in April 2019, the stock has delivered ...

PremiumThis is a premium article. Click here to read.

default
Polycab India Ltd. is trading above it's 200 day SMA of 1879.0
Mutual Funds News    
TREND | 18 Nov 2021
Following the fund flows this month – What is the smart money buying?

By Ketan Sonalkar

The monthly portfolio disclosures by mutual funds give investors an insight into what the smart money is doing in the market and the sectors and companies that are currently in favour or have fallen off the radar for fund managers. This screener shows stocks where mutual funds increased holdings in October 2021. The monthly data indicates growing interest from fund managers in a leading technology company, cement as well a general insurance company. Real estate, pharma as well as financial services companies are also seeing fund managers’ interest piquing in October 2021.

HCL Technologies – geared up for new order wins 

HCL Technologies is among India’s top five IT services companies. It recorded its highest ever quarterly revenues in Q2FY22 at Rs 20,895 crore. The management guided for revenue growth of 22-23%, and EBIT margin in the range of 19-21% for FY22.

In Q2FY22, HCL Technologies secured multiple and high-value long-term contracts with the world’s leading brands. The new deals include the addition of 18 new clients in the $ 20 million deal category, 18 new clients in the $ 50 million deal category, and 1 new client in the $ 100 million deal category. A strong deal pipeline and diverse service mix across sectors will help the company attain growth in FY22 as well as in FY23

Anticipating strong demand in the coming months, the company is on a hiring spree and hired around 11,135 employees during Q2FY22. Over the last three quarters, the company has so far hired a combined total of around 32,000 employees.

Fund managers who increased their holdings in HCL Technologies

Fund managers who added HCL Technologies to their portfolio are Priyanka Khandelwal, Sankaran Naren and Dharmesh Kakkad toICICI Prudential Value Discovery Fund Growth scheme, Sailesh Jain to Tata Arbitrage Fund Regular Growth scheme, Hiten Shah to Kotak Equity Arbitrage Fund Growth scheme, and Manish Banthia, Priyanka Khandelwal and Sankaran Naren to ICICI Prudential Equity & Debt Fund Growth scheme.

Ambuja Cements – Capacity expansions lay foundation for future growth

Ambuja Cements is a leading cement company in India. It is part of the LafargeHolcim Group, the global leader in the building materials industry.

The company commissioned its new greenfield project at Marwar Mundwa, Rajasthan in September 2021. This plant has a production capacity of 1.8 MT (million tonnes) cement, 3 MT clinker. This is expected to boost cement sales by about 5 MT. With this, the company’s installed cement capacity now stands at 29.7 MTPA (million tonnes per annum) with four captive ports.

In keeping with the company’s target to reach 50 MT capacity in the next few years, the company has already embarked upon a new brownfield expansion of 1.5 MT cement grinding unit at Ropar, Punjab.

Fund managers who increased their holdings in Ambuja Cements

Gaurav Misra and Gaurav Khandewaladded Ambuja Cements to Mirae Asset Large Cap Fund Regular Growth scheme, Priyanka Khandelwal, Rajat Chandak and Anish Tawakley to ICICI Prudential Bluechip Fund Growth scheme, Harsha Upadhyaya, Abhishek Bisen and Arjun Khanna added the company to Kotak Multicap Fund Regular Growth scheme and Dinesh Ahuja, Dinesh Balachandran and Mohit Jain added the stock to SBI Balanced Advantage Fund Regular Growth scheme.

ICICI Lombard General Insurance – Ensuring profitability in a post-pandemic world

ICICI Lombard General Insurance is a leading private general insurance company that offers various insurance products like travel, home, health and motor covers.

In Q2FY22, net premium earnings grew 32.0% YoY to Rs. 3,250 crore. PAT increased by 7.4% YoY to Rs 447 crore. To maintain its profitability, the company raised prices on group health policies by 15-20% due to an increase in health insurance claims arising due to the pandemic. 

Another positive development is the completion of the merger with Bharti AXA. The company received the final approval from the IRDAI (Insurance Regulatory and Development Authority of India) on September 3, 2021.

Fund managers who increased their holdings in ICICI Lombard

Fund managers who added ICICI Lombard GI to their portfolio are R Srinivasan to SBI Focused Equity Fund Growth scheme, Priyanka Khandelwal, Sankaran Naren and Dharmesh Kakkad to ICICI Prudential Value Discovery Fund Growth scheme, R.Srinivasan and Dinesh Ahuja purchased shares for SBI Equity Hybrid Fund Regular Payout Inc Dist cum Cap Wdrl scheme and Dinesh Ahuja, Dinesh Balachandran and Mohit Jain purchased for SBI Balanced Advantage Fund Regular Growth scheme.

Oberoi Realty – Unprecedented response to new launches piques investor interest

Oberoi Realty is a Mumbai-focused real estate developer with a presence in the premium residential, commercial, and hospitality segments.

In October 2021, the company witnessed a phenomenal response to its new project Elysian in Goregaon, Mumbai. It recorded gross bookings of Rs 787 crore for 3.9 lakh sq ft within days of the project launch.

The cumulative gross booking value from January 2021 to date for ongoing projects stood at about Rs 2,705 crore, which is higher than the annual revenues for any year in the past five years. With demand for premium projects picking up and an expansive lineup of projects, Oberoi Realty is on the radar of many fund managers.

Fund managers who increased their holdings in Oberoi Realty

Hiten Shah purchased shares for Kotak Equity Arbitrage Fund Growth scheme, Sailesh Raj Bhan and Kinjal Desai purchased shares for Nippon India Multi Cap Fund - Growth scheme, while Shridatta Bhandwaldar added to Canara Robeco Emerging Equities Growth scheme and Aniruddha Naha and Ravi Adukia added to PGIM India Flexi Cap Fund Regular Growth scheme.

Glenmark Pharmaceuticals - new US facility and consumer healthcare to drive growth 

Glenmark Pharmaceuticals is a research-driven pharma company with a global presence. The September 2021 quarter was an important quarter for the company as it posted its highest-ever quarterly revenues of Rs 3,134.4 crore and highest quarterly operating profit at Rs 590.2 crore.

The company commissioned a new facility at Monroe in the US, which will bolster the US business. It is the company’s first manufacturing site in the US. Another product expected to gain substantial market share is Ryaltris, (nasal spray for allergic rhinitis) which has been launched in the US as well as global markets.

In India, Glenmark Pharma forayed into the consumer health segment focusing on dermatology products led by two brands, Candid and Scalpe plus.

Fund managers who increased their holdings in Glenmark Pharmaceuticals

Fund managers who added Glenmark to their portfolios are Anil Shah and Vinod Bhat to Aditya Birla Sun Life Flexi Cap Fund Growth scheme, Anil Shah to Aditya Birla Sun Life Mid Cap Fund Growth scheme. Shares were purchased by Hiten Shah for Kotak Equity Arbitrage Fund Growth scheme and Sailesh Jain for Tata Arbitrage Fund Regular Growth scheme.

ABB India - New sectors open up doors for future growth

ABB India is a multinational corporation headquartered in Zürich, Switzerland, operating mainly in robotics, power, heavy electrical equipment, and automation technology areas.

InQ2FY22, the company bounced back with revenues of Rs 1,803 crore, the highest in the last seven quarters and profits of Rs 119.9 crore, a YoY increase of 50%

The company received new orders of total of Rs 19,100 crore, contributed by Motion (42%), Electrification (37%), Process Automation (19%). New high growth sectors such as renewables, water, data centers, railways, metro and F&B (food and beverage) are the sectors driving the order book.

Sanjeev Sharma, Managing Director at ABB India, said, “the strong demand for ABB products, solutions and services portfolio in many of our targeted market segments along with our continuous focus on operational efficiency and cost control ensured improvement in profitability despite the sharp increase in commodity prices during the quarter.”

Fund managers who increased their holdings in ABB India

Aniruddha Naha and Vivek Sharma added to PGIM India Midcap Opportunities Fund Regular Growth scheme, Manish Gunwani, Kinjal Desai and Dhrumil Shah to Nippon India Growth Fund - Growth scheme, while Abhiroop Mukherjee and Herin Visaria added to Motilal Oswal Flexicap Fund Regular Plan Growth scheme and Shreyash Devalkar and Hitesh Das to Axis Midcap Fund Growth scheme.

Gokaldas Exports - Capacity addition and favourable policy to aid future revenues

Gokaldas Exports is one of India’s leading apparel exporters with an annual capacity of 30 million pieces. The Q2FY22 results are significant, with the highest quarterly revenues in the last six quarters of Rs 1,803 crore and operating profit of Rs 165.4 crore.

Production is currently running at peak utilisation levels, with a robust order book for the next six months. Demand from the US apparel market continues to remain healthy. The company has planned a capex of Rs 340 crore over the next four years (till FY25) which will help generate additional revenues worth Rs 1,350 crore.

Government policies like the PLI (production linked incentive) scheme for textiles and textiles parks policy is set to boost apparel exports from India. In addition, China+1 strategy of global brands provide long-term growth opportunities for players like Gokaldas Exports.

Fund managers who increased their holdings in Gokaldas Exports

Gokaldas Exports found buyers in fund managers Samir Rachh and Kinjal Desai for Nippon India Small Cap Fund - Growth scheme, Sohini Andani for SBI Magnum Midcap Fund Regular Growth scheme, Chandraprkash Padiyar and Satish Chandra Mishra for Tata Small Cap Fund Regular Growth scheme and Saurabh Pant for SBI Consumption Opportunities Fund Regular Plan Payout Inc Dist cum Cap Wdrl scheme.

Escorts - Collaboration paves the way for increased export potential 

Escorts is the third-largest tractor manufacturer in India. It has a strong presence in northern and western India. It is present in construction and material handling equipment, such as cranes, compactors, and forklifts.

The collaboration with Japanese tractor maker Kubota helped expand the products and technology upgrades in tractors, which resulted in improved numbers both in the domestic market, as well as exports. 

Growth in the construction equipment segment is likely to drive sales in H2FY22 due to the thrust for massive infrastructure projects in India.

Fund managers who increased their holdings in Escorts

Fund managers purchasing shares of Escorts include Taher Badshah and Dhimant Kothari for Invesco India Contra Fund Growth scheme, Kinjal Desai, Anand Gupta and Anju Chhajer for Nippon India Arbitrage Fund Growth scheme, while Sajeev Sharma, Vasav Sahgal, and Ankit Pande added shares to two schemes, Quant Active Fund Growth scheme and Quant Mid Cap Fund Growth scheme.

Prince Pipes and Fittings - New partnership set to increase production and sales 

Prince Pipes is a manufacturer of PVC and UPVC pipes for plumbing, agriculture, and sewage disposal. The company listed on the stock exchanges in December 2019  and its stock saw a stellar rise since. In the 22 months since listing the company’s stock rose nearly 6X returns till October 2021. The Q2FY22 results were encouraging as the company posted its highest-ever quarterly revenues of  Rs 762.5 crore.

A major development for the company in Q2FY22 was the partnership with Lubrizol for supply of Corzan CPVC processors to manufacture and sell Corzan CPVC material and piping solutions in India. This can significantly boost the sales of CPVC products in coming quarters.

Fund managers who increased their holdings in Prince Pipes

Neelesh Surana and Ankit Jain purchased shares for Mirae Asset Emerging Bluechip Fund Growth scheme, Mahendra Kumar Jajoo, Harshad Borawke and Vrijesh Kasare for Mirae Asset Hybrid Equity Fund -Regular Plan-Growth scheme, Neelesh Surana for Mirae Asset Tax Saver Fund -Regular Plan-Growth scheme and Ankit Jain for Mirae Asset Midcap Fund Regular Growth scheme.

Motilal Oswal Financial Services - Growth across verticals in a competitive space

Motilal Oswal is a diversified financial services company. Its verticals include capital markets, asset management, housing finance, and fund-based investments. Since the onset of the pandemic, the company was an unexpected beneficiary of the exponential growth in new demat accounts and investors in the capital markets.

The company’s Q2FY22 results indicate the growing stickiness of customers. It posted its highest ever quarterly revenues of Rs 1328.8 crore. Revenues grew across verticals, with capital markets revenues of Rs 604.8 crore, an increase of 44% YoY, asset management revenues of Rs 147.2 crore, an increase of 27% YoY and private equity revenues of Rs 151 crore, an increase of 463% YoY.

Fund managers who increased their holdings in Motilal Oswal Financial Services

Fund managers who added to their portfolios are Rajeev Thakkar, Raunak Onkar and Raj Mehta to two schemes, Parag Parikh Flexi Cap Regular Growth and Parag Parikh Tax Saver Fund Regular Growth, Prasanna Pathak also added to two schemes Taurus Flexi Cap Fund - Growth and  Taurus Tax Shield-Growth Option.

1 Comment
satish995 Does regular and direct MFs have different holdings? The above articles refer to Regular schemes only.
23 Nov 2021
Prabhudas Lilladhar released a Economy Update report for Mutual Funds News on 20 Nov, 2021.
2556.70
0.22%
HDFC AMC battles rising competition in the asset management industry

By Ketan Sonalkar

In the last one and a half years, the asset management industry is witnessing fundamental changes in operations, digital disruptions, new product categories and in its challenge to capture the exponential number of customers who have opened new demat accounts in the same period.

HDFC Asset Management ...

PremiumThis is a premium article. Click here to read.

HDFC Asset Managemen.. has an average target of 3085.00 from 2 brokers.
Is ICICI Prudential Life Insurance a sector leader in the making?

By Ketan Sonalkar

ICICI Prudential Life Insurance (ICICI Pru Life) presented its Q2FY22 results, post the second wave of Covid-19. The first two-quarters of FY22 saw huge covid related claims accompanied by an increase in penetration of insurance cover. Claim provisions, as well as new products with Covid-19 cover, are changing the dynamics of the insurance industry. 

In such a scenario, ICICI Pru Life posted its highest ever Q2 revenues. It also improved its score on industry-specific metrics and is gaining market share among private life insurance companies. 

Quick Takes

  • ICICI Pru Life clocked highest ever Q2 revenue in Q2FY22 at Rs 772.6 crore

  • Total claims on account of second wave in H1FY22 stood at Rs 1,879 crore

  • The company's absolute VNB (value of new business) grew 45% YoY to 873 crore for the first half of FY2022

  • More than half of the sales in Q2FY22 were contributed by linked policies (unit linked insurance plans)

  • The annuity business segment witnessed strong growth of 95% YoY in H1FY22 to Rs 1,347 crore

Strong quarter with contributions from all channels

ICICI Pru Life has the distinction of achieving its highest ever Q2 revenues in Q2FY22, since its inception. Historically in a given financial year, Q4 is the highest revenue contributor for any insurance company, with large numbers of policies purchased for income tax benefits before closure of the financial year. 

ICICI Pru Life’s Q2FY22 revenues surpassed Q4FY21 revenues, setting the expectation of exceeding these numbers in Q4FY22.

Quoting the management on the results, “Significantly, we posted our best-ever September on monthly sales for any year since inception. Our new business sum assured grew by 35 per cent year-on-year to Rs 3.37 trillion in H1FY22, and we continued to be the private sector leader with an overall market share of 13.2 per cent.”

Sales was led by the bancassurance channel, which contributed 39% with the channel having a total of 23 banca partnerships. This is followed by the agency channel at 24%, where another 12,000 agents were during H1FY22.

Sales of insurance products are calculated based on a metric called APE (annualized premium equivalent). APE is specifically used when sales contain both single premium and regular premium business. Single premium insurance policies require a single lump-sum payment from the policyholder. 

The regular premium policies are annualized by taking the premium amount and multiplying it by the frequency of payments in the billing cycle. APE is the sum of the regular annualized premium from the new business in addition to 10% of the first single premium in a given period.

APE of linked products (unit-linked insurance plans) now stands at 51% in Q2FY22, after dipping to 44% in Q1FY22. The QoQ increase in the linked products is due to the launch of new funds, such as the balanced advantage fund and ESG (environment, social and governance) fund, which found takers in a section of the customer base.

While linked products contributed 85% in FY17, ICICI Pru Life, over the last few years, has reduced its dependence on this segment and diversified its product mix. In Q2FY22, non-linked products contributed 30%, group insurance share increased to 5% and protection products share grew to 14%. In the last few quarters, ICICI Pru Life is gaining share in the group insurance business with focus on large corporates. 

VNB (value of new business) in insurance industry parlance, is a metric to measure performance of insurance companies. VNB is the profit the company makes on policies sold during the period after accounting for all the costs incurred and assuming future premium payments and mortality. In life insurance, VNB is the present value of future profits associated with new policies sold during the accounting period.

ICICI Pru Life’s VNB grew 45% YoY to Rs 873 crore in H1 FY2022. New business premium (NBP) surged 45% YoY to Rs 6,461 crore in H1 FY2022.

Improvement across insurance industry metrics and ratios

ICICI Pru Life’s solvency ratio stood at 199.9% in Q2FY22, well above the regulatory requirement of 150%. The assets under management stood at Rs 2,37,087 crore in Q2FY22, up 31% YoY.

Persistency ratio is the proportion of policyholders who continue to pay their renewal premium. It helps identify the stickiness of policyholders, and whether they keep paying their premiums. 

ICICI Pru Life’s 13th month persistency ratio improved to 85.1% in Q2FY22, rising from 82.1% for the same period last year. Increasing persistency ratios across time periods indicates the growing proportion of policyholders paying their insurance premiums on time. The improvement in persistency ratio is also on account of the increased awareness of life insurance after the outbreak of the pandemic.

Significant impact due to second wave of Covid-19

The pandemic unfortunately claimed many lives since its outbreak. Life insurance companies are settling massive numbers of claims due to Covid-19. The full-year claims due to Covid-19 in FY21 were Rs 354 crore. The second wave of Covid-19 which was more severe, saw ICICI Pru Life settle claims for Rs 1,879 crore in H1FY22. 

Claims net of reinsurance during H1FY22 were Rs 862 crore as against Rs 198 crore in the same period a year ago. ICICI Pru Life has made a provision of Rs 412 crore for future COVID-19 claims, including IBNR (incurred but not reported).

For a given period, the total number of claims may not go reported in the same period. Insurance companies have provisions for these claims in the form of reserves such as the IBNR reserves. These reserves are also kept for situations where the existing reserves may prove insufficient for the claims that have been understated.

As an operating process, reinsurance is carried out by insurance companies to pass on part of the risk on policies covered. Reinsurance is a process whereby the reinsurer takes on all or part of the risk covered under a policy issued by an insurance company in consideration of a premium payment. It is a form of an insurance cover for insurance companies.

In a con call with analysts, ICICI Pru Life’s management said that re-insurers have indicated another price increase. It will pass on the entire hike to customers, and does not expect any material impact on margin. 

HDFC Life declared its results close on the heels of ICICI Pru Life, which has fared better than HDFC Life on key metrics. In Q2FY22, ICICI Pru Life’s YoY revenue growth stood at 23.5% vs 18.4% for HDFC Life, while ICICI Pru Life’s VNB YoY growth stood at 45% as against 24% for HDFC Life. 

The life insurance industry is growing at a rapid pace and ICICI Pru Life is among the top private insurance players. Whether it can further gain market share and command leadership in the sector is the next challenge for the company. With a stellar Q2FY22, investors need to keenly track the next two quarters and the litmus test for Q4FY22 would be to surpass the Q2FY22 performance.

ICICI Prudential Life Insurance Company Ltd. has gained 30.20% in the last 1 Year
Mutual Funds News    
TREND | 20 Oct 2021
Following the fund flows – What's the smart money buying?

By Ketan Sonalkar

The monthly portfolio disclosures by mutual funds give investors an idea of where the smart money is moving in the market, and the sectors and companies that are in vogue or have fallen off the radar for fund managers. This screener shows stocks where mutual funds increased holdings month on month. This month's data shows growing interest from fund managers in a housing finance company, power trading company, a large conglomerate, and a steel pipe manufacturer among others.

 

 

KPR Mill – Capacity expansion and textile parks policy set to spin growth

KPR Mill is one of India’s largest knitted garment manufacturers. Its upcoming garments facility with an annual capacity of 42 million pieces is expected to be commissioned by Q2FY22. From this incremental capacity, 60-70 % is to be utilised for existing customers and balance for new customers. The new facility is expected to generate incremental revenue of around Rs 600 crore from FY23 onwards.

Additionally, the company is expected to benefit from government policies like the textiles parks policy, two of which are proposed in the state (Tamil Nadu) where its existing production facilities are located.

Fund managers who increased their holdings

Fund managers who added KPR Mill to their portfolios are Aniruddha Naha and Ravi Adukia to PGIM India Flexi Cap Fund Regular Growth scheme, Ankit Agarwal to UTI Small Cap Fund Regular Growth scheme, Vishal Mishra to Canara Robeco Value Fund Regular Growth scheme and V. Shrivatsa to  UTI Core Equity Fund Regular Plan Growth scheme.

Can Fin Homes - Cashing in on affordable housing and low interest rates 

Can Fin Homes is a retail-focused housing finance company promoted by Canara Bank. The company primarily operates in the affordable housing category with the average ticket size of the loans being less than Rs. 25 lakhs with a median tenure of 16 to 20 years.

The real estate and housing finance sector is in a sweet spot since the interest rates are at their lowest levels in the last two decades. The government’s focus and tax breaks for affordable housing borrowers and builders, together with waivers or concessions on stamp duties by some states, will further boost demand.

Fund managers who increased their holdings

Vetri Subramaniam and Amit Premchandani added Can Fin Homes toUTI Value Opportunities Fund Regular Plan Growth scheme,Hitesh Shah to Kotak Equity Arbitrage Fund Growth scheme, Venugopal Manghat and Vihang Naik to L&T India Value Growth scheme and Vetri Subramaniam and Vishal Chopda added the company to UTI Long Term Equity Fund - Regular Plan -Payout Inc Dist cum Cap Wdrl scheme.

Adani Enterprises - Spreading its wings across diverse sectors

Adani Enterprises is a conglomerate operating multiple businesses including airports, power, gas etc. Recent developments are indicating aggressive growth plans across verticals. Adani Airport Holdings (AAHL), a wholly-owned subsidiary of Adani Enterprises Ltd has signed a share subscription agreement with April Moon Retail Pvt Ltd (AMRPL) and existing shareholders to operate duty-free outlets at airports in Q2FY22.

In addition, Adani Enterprises has been allotted over 34,000 sq metre land for setting up a data centre in Noida. The expected investment is around Rs 2,400 crore. Another vertical that the Adani Group is set to enter is the cement business.

With massive expansion plans across various sectors, this is one stock which is drawing interest from investors and fund managers.

Fund managers who increased their holdings

Dinesh Ahuja, Dinesh Balachandran and Mohit Jain added toSBI Balanced Advantage Fund Regular Growth scheme, Amit Sharma and Shrawan Kumar Goyal to UTI Arbitrage Fund Regular Plan Growth scheme, Hiten Shah bought for Kotak Equity Arbitrage Fund Growth scheme and Kinjal Desai, Anand Gupta and Anju Chajer added to Nippon India Arbitrage Fund Growth scheme.

Bajaj Auto - Electric Vehicles and exports driving future strategy

Bajaj Auto is the second largest player in the Indian motorcycle segment and continues to be the largest exporter of two-wheelers from India. The company is also the single-largest player in the Indian three-wheeler market. 

Bajaj Auto’s monthly wholesales have been rising over the last two months. The government has announced a PLI (production linked incentive) scheme for the auto sector with a focus on EVs (electric vehicles). Bajaj Auto already sells EVs and it is expected to be a beneficiary of the scheme.

Fund managers who increased their holdings

Dinesh Ahuja, Dinesh Balachandran and Mohit Jain added Bajaj Auto toSBI Balanced Advantage Fund Regular Growth scheme. Roshi Jain, Anand Radhakrishnan and Mayank Bukrediwala purchased the company’s shares for Franklin India Focused Equity Fund Growth scheme, Anand Radhakrishnan and R. Janakiraman added to Franklin India Flexi Cap Fund Growth scheme and Abhiroop Banerjee and Herin Visaria bought shares for Motilal Oswal Flexicap Fund Regular Plan Growth scheme.

APL Apollo Tubes - Niche steel products capturing more than 50% market share

APL Apollo Tubes is India’s leading structural steel tube manufacturer with a pan-India presence. It is the largest manufacturer of Structural Steel Tubes in India, which finds applications in residential and commercial buildings, warehouses, factories, agriculture, and other Infrastructure works and commands 50% market share in India.

With increasing transition to structural tubes, the Delhi government recently announced construction of seven hospital buildings at different locations using 100% structural steel tubes, with APL Apollo being the sole supplier. The entire project is expected to be completed in a record time of five months.

Fund managers who increased their holdings

Deepak Agarwal and Hitesh Das added  APL Apollo Tubes shares for Axis Quant Fund Regular Growth scheme, Ankur Arora for HSBC Mid Cap Fund Regular Growth scheme, and Ankit Agarwal for UTI Mid Cap Fund Regular Plan Growth scheme 

 

 

Berger Paints - Expected to retain edge in a highly competitive market

Berger Paints is the country’s second largest paints maker in the decorative segment. It is eyeing a consolidated turnover of Rs 10,000 crore in next three years. In FY21, it had clocked revenues of around Rs 6,800 crore, which was its highest ever annual revenues.

The management has indicated that while it is also growing its international presence, the major contributor to the growth would be the India market and the drivers would be the decorative, protective and construction chemicals segments.

The paint sector is getting highly competitive with the recent entry of JSW Paints and the proposed entry of Aditya Birla Group into paints. This has put the paints industry on the radar of fund managers.

Fund managers who increased their holdings

Ajay Tyagi purchased shares forUTI Flexi Cap Fund Regular Plan Growth scheme, Kayzad Eghlim and Priyanka Khandelwal for ICICI Prudential Equity Arbitrage Fund Regular Growth scheme, Bhavesh Jain and Dhaval Dalal added to Edelweiss Arbitrage Fund Regular Growth scheme and Hitesh Shah purchased for Kotak Equity Arbitrage Fund Growth scheme.

PTC - Charging up for power play with new policy

PTC (Power Trading Corporation), the leading provider of power trading solutions in India, was established in the year 1999 as a government initiated Public-Private Partnership, which would  primarily focus on developing a commercially vibrant power market in the country.

The government recently announced the framework for the implementation of the Market Based Economic Despatch (MBED) system - Phase 1, a new set of reforms that will push the power sector away from power purchase agreements towards market-based pricing. This will be implemented from FY23 onwards.

MBED is an electricity market which aims to cut power procurement costs of power distribution companies (discoms). Power plants which supply electricity across multiple states will have to mandatorily participate in the MBED system while other generation plants can also volunteer. PTC is expected to play a key role under the MBED system.

Fund managers who increased their holdings

Samir Rachh and Kinjal Desai added PTC India’s shares to Nippon India Small Cap Fund - Growth scheme, Taher Badshah and Pranav Gokhale bought for Invesco India Smallcap Fund Regular Growth scheme and Taher Badshah and Dhimant Kothari for Invesco India Contra Fund Growth scheme.

Bajaj Finserv - Emerging as a non-banking financial services giant 

Bajaj Finserv is a financial conglomerate with a holding in the financing business (Bajaj Finance), life insurance (Bajaj Life Insurance) and general insurance (Bajaj General Insurance) business.

It saw a muted performance in Q1FY22, due to the severe impact of second lockdown on NBFCs (non-banking finance companies) and higher reinsurance ceded in insurance business. It is expected to recover Q2FY22 onwards, with normalcy in economic activities and technological initiatives that augur well for the next stage of growth. 

Recently, Bajaj Finserv got SEBI’s in-principle approval to sponsor a Mutual Fund (MF). This has got investors and fund managers excited about this stock.

Fund managers who increased their holdings

Sailesh Jain added shares to Tata Arbitrage Fund Regular Growth scheme, Shreyash Devalkar and Hitesh Das bought for Axis Bluechip Fund Growth scheme, Hiten Shah added to Kotak Equity Arbitrage Fund Growth scheme and Jinesh Gopani added to Axis Long Term Equity Fund Growth scheme

PEL - Value unlocking on the cards with demerger

PEL (Piramal Enterprises) is a company with diverse interests including pharmaceuticals, housing finance and construction. In September 2021, PEL completed the acquisition of the bankrupt Dewan Housing Finance Corporation Ltd (DHFL) by making cash payment of ?14,700 crore to creditors as per the resolution plan.

Recently, PEL’s board approved the simplification of its corporate structure by creating two separate listed entities in Financial and Pharmaceutical Services, subject to shareholder, creditor and regulatory approvals. The demerger would optimize the capital structure for each business and enable both to independently pursue growth opportunities.

Fund managers who increased their holdings

Hiten Shah purchased shares forKotak Equity Arbitrage Fund Growth scheme, Venugopal Manghat and Praveen Ayathan added to L&T Arbitrage Opportunities Fund Regular Growth scheme, Kinjal Desai and Anand Gupta purchased for Nippon India Arbitrage Fund Growth scheme and, Bhavesh Jain and Dhaval Dalal added to Edelweiss Arbitrage Fund Regular Growth scheme.

HDFC AMC - Banking on new leadership for the next leg of growth

HDFC AMC (HDFC Asset Management Company) is one of the largest asset management companies (AMC) in India. 

HDFC AMC is banking on Navneet Munot, who took on the reins this FY as Managing Director to drive it to a leadership position. In a recent call with investors, the MD said that they have launched a few products, and are planning to launch some more products over the next few quarters, which would capture investor attention and help the company gain market share.

Standard Life Investments, which held 21.2% of HDFC AMC stake, offloaded 5% of its stake in September 2021, leading to buying by fund managers.

Fund managers who increased their holdings

Yogik Pitti, Harshal Joshi and Arpit Kapoor bought shares forIDFC Arbitrage Fund - Regular Plan - Growth scheme, Sailesh Jain for Tata Arbitrage Fund Regular Growth scheme, Hiten Shah purchased shares for Kotak Equity Arbitrage Fund Growth scheme and, Bhavesh Jain and Dhaval Dalal added to Edelweiss Arbitrage Fund Regular Growth scheme.

Prabhudas Lilladhar released a Economy Update report for Mutual Funds News on 20 Nov, 2021.
Indo Count Industries Ltd.    
11 Oct 2021
229.65
-2.94%
Indo Count Management Call: Export opportunities boom as buyers look beyond China

By Ketan Sonalkar

Indo Count Industries (Indo Count) is one of India’s largest home textile manufacturers and exporters with a product range spanning across bedsheets, quilts and bed linen. It has a presence in the top nine of 10 big-box retailers in the US, having long term contracts with each of ...

PremiumThis is a premium article. Click here to read.

Indo Count Industries Ltd. has lost -15.20% in the last 1 Week
Minda Industries Ltd.    
04 Oct 2021
914.85
1.75%
Minda Industries is increasing its component share in every vehicle

By Ketan Sonalkar

The normally staid auto industry is now witnessing a massive churn- the shift to BS-VI emission norms which led to higher costs, the rise of electric vehicles, and a focus on new technology-driven features like smart lighting, electronic stability systems, and infotainment systems. 

With the pandemic affecting production and sales in FY21, the shortage of semiconductors is leading to a delay in production for major original equipment manufacturers (OEMs) since the beginning of this year. The effect is felt not only by OEMs but also by auto ancillary makers. 

Minda Industries is a dominant player in this space - it is India’s largest maker of automotive switches, horns, seats, and car alloy wheels, and the third-largest automotive lighting maker. What differentiates this company from other players is that more than 90% of its products are used in conventional as well as electric vehicles.

Quick Takes

  • In a pandemic stricken FY21, the company registered its highest ever annual revenues at Rs 6,240.8 crore

  • Its largest-ever acquisition of a company in Harita Seating announced in February 2019 was completed in Q1FY22

  • The company has consistently increased its share of components inside vehicles in all categories of two and four-wheelers over the last three years

  • The June 2021 quarter was impacted by the second wave of Covid-19, but the management expects to do better in subsequent quarters

  • Minda Industries is focusing on increasing EV (electric vehicle) components and currently supplies telematics and smart plugs to two two-wheeler EV makers

 Bouncing back despite a challenging environment

The company saw a recovery in FY21 despite the pandemic and registered its highest ever annual revenues at Rs 6,420.8 crore. Although it was on a lower base, the company also posted a 25% YoY net profit growth at Rs 206.6 crore in FY21.

On account of the pandemic, FY21 was one of the most challenging years for the company. After recording its lowest ever quarterly revenue in Q1FY21 and also a loss, it posted higher revenues and net profits in every subsequent quarter in FY21. But again, revenues hit a roadblock due to the second wave of Covid-19 in Q1FY22. 

Minda Industries’ revenues are driven by both two-wheelers and four-wheelers, with the former contributing 47% and the latter the rest. Its customers include all major auto manufacturers including Maruti Suzuki, TVS Motors, Eicher Motors, Tata Motors, and Bajaj Auto. Domestic sales make up 84% of the total revenues of the company.

The company supplies sophisticated auto components like reverse parking sensors, lamps, seats etc. The replacement market for these components amounts to 12% of its annual sales.

The product portfolio is diversified with switches and lighting systems being the largest revenue contributors. Each product segment is growing due to an increase in the number of products and an increasing customer base.

BS6 emission norms have increased the requirement of sensors in powertrain management and emission control systems. Minda has an agreement with Sensata Technologies (USA) for the distribution and manufacturing of sensors. It has acquired magnetic speed and position sensors from Sensata, which has applications in BS6 products. 

Newer product lines like seating, sensors, controllers, LED lights and alloy wheels are helping the company increase its component share in OEMs across segments. Also, as most of these components are imported from China, it presents Minda Industries with significant opportunities to replace these value-added products with its own. The company is developing critical components for electric two-wheelers like BMS (battery management systems), AC-DC converter chargers, smart plugs, etc. which are being developed by its in-house R&D team.

Charging up for a higher component share in EVs

The company currently supplies telematics and smart plugs to OEMs. It is developing a battery management system and AC-DC converter charger for EV two-wheelers. The company supplies its existing products to EV OEMs such as Hero Electric, Ampere, Okinawa, etc. TVS Motors recently launched EV iQube equipped with Minda Industries’ smart plug charging system.

Among other products under R&D for EVs are BCM (body control module), on-board charger, motor controller, and battery management system. With a growing EV market, Minda Industries can ride out this growth and further increase its component per EV.

Strong order book and an acquisition in Q1FY22

In Q1FY22, the company won orders worth Rs 75 crore from American and European commercial vehicle (CV) OEMs in the seating segment. In the four-wheeler alloy wheel segment, the company won two orders, one each from a Korean and Japanese OEM. The order wins are expected to bolster revenues in the remaining quarters of FY22.

In FY21, revenue contribution from the alloy wheel business stood at Rs 80 crore. Management expects this segment to touch revenues of Rs 250 crore in FY22. In the four-wheeler lighting segment, the company has LED headlamp orders from Indian and Japanese OEMs and in the global horns business, the company won an order from a European OEM for the supply of electromechanical horns.

In June 2021, Minda Industries announced that it will acquire a 51% stake in Uzbekistan-based automotive lighting manufacturer, UZ Chasys, for around Rs 58 crore. The Uzbekistan government is moving toward liberalisation of the economy and divesting its stake in some of its state-owned companies. The acquisition will further expand Minda's geographical footprints.

The management guided for an overall capex (capital expenditure) of Rs 600 crore for FY22. Out of this, Rs 250 crore is for maintenance and upgrades, while Rs 350 crore will be utilised for growth. The company is in the process of setting up three new plants. One for blow moulding, one in Gujarat for lighting, and another for expansion of the Bawal plant. The company is augmenting the capacity of its four-wheeler wheel plant at Bawal by 60k units at an investment of Rs 167 crore. The project is expected to be completed by Q4FY22. The additions of product lines and upgraded facilities and acquisition will be contributing factors for revenue growth over the next three years.

PLI scheme for auto industry a boost for the company

In September 2021, the Union Cabinet approved Rs 26,058 crore of production-linked incentives (PLI) to encourage domestic production of automobiles, drones, and their components to enhance India’s manufacturing capabilities. The PLI scheme for the auto sector will incentivize high-value advanced automotive technology vehicles and products. It will also help in faster adoption of the latest and superior technologies along with more efficient and green automotive manufacturing. 

A total of 22 components have been covered under the scheme including flex-fuel kits, hydrogen fuel cells, hybrid energy storage systems, and electric vehicle parts such as charging ports, drive trains, electric vacuum pumps, and electric compressors. Sunroofs and electronic stability controls have also been added to the scheme coverage. Minda Industries, with its growing EV components portfolio, is in a position to avail benefits under this scheme.

The PLI scheme for the auto sector will be applicable from FY23 for five years, and the base year for eligibility criteria would be 2019-20. The scheme is open to existing automotive companies, as well as new investors who are currently not in the automobile or auto component manufacturing business. For auto component manufacturers, the government will provide incentives in the range of 8%-13% with an additional 5% incentive for manufacturers of battery cell and hydrogen fuel cell components.

With an increase in the number of components per vehicle and focus on enhancing EV components, Minda looks set to capitalise on future trends of the auto industry, and increase its global footprint. For investors eyeing the auto ancillary industry, with a focus on the EV theme, Minda Industries is a company to keep on your radar.

Minda Industries Ltd. is trading above all available SMAs
Healthcare    
SECTOR | 24 Sep 2021
Tech will create new winners and losers in the Indian diagnostics space

By Ketan Sonalkar

The expanding use of technology is changing the way many industries operate. The specialized health diagnostics industry is seeing itself rapidly transformed with digitisation. The efficiencies and cost advantages this gives some players can lead to rapid consolidation, with the end result just a few companies with a national digital reach.

This consolidation process has already started.

The pandemic threw the diagnostics industry into the limelight, and testing for Covid-19 played a vital role in identifying cases and controlling outbreaks. Lockdowns and limitations on movement forced diagnostic companies to rework their models, and build digital platforms for patients to book appointments online via websites and app-based solutions, and book slots for home collection of samples. Technology was leveraged to fully integrate and automate processes ranging from registration and billing, tracking of specimens and their analysis, to reporting of test results. Both companies and patients were forced to adapt to new digital-only processes.

The diagnostics industry comprises two types of tests. First is pathology testing or in vitro diagnosis involving the collection of samples in the form of blood, urine, stool, etc., and analyzing them using laboratory equipment and technology to arrive at useful clinical information that assists in the treatment of diseases.

Second is imaging diagnosis or radiology which involves imaging procedures such as X-rays and ultrasounds that help determine anatomical or physiological changes inside a patient’s body. It includes more complex tests such as CT scans, MRIs, and highly specialised PET-CT scans. Pathology tests account for 70% of the volume of tests and imaging tests constitute the rest. While pathology tests are typically low-margin tests, specialized imaging tests contribute higher margins for diagnostic companies.

 

The diagnostics industry is fairly fragmented with individual laboratories and hospital-based chains having a large share of the market. Diagnostic chains form 16% of the total diagnostics market, with 10% being regional chains and only 6% of the market is served by pan India chains. With the increase in digital reach by diagnostic companies, the next few years could see pan India chains gain a bigger share of this pie.

There has been a lot of action in this space over the last couple of months. In Q2FY22, two more companies, Krsnaa Diagnostics, a pan India chain, and Vijaya Diagnostics, a regional chain, got listed on stock exchanges. This took the total number of listed diagnostic companies to five. Out of these, one company changed ownership as online pharmacy PharmEasy bought outThyrocare’s promoters in June 2021 with the objective of adding diagnostic services under its platform. Thyrocare is the third-largest listed diagnostic company, and its takeover by a digital platform signals more consolidation by digital platforms in the future.

Online pharmacies set to change the game

Many online pharmacy platforms, apart from delivering medicines, also offer consultations and appointments with doctors. They have tie-ups with laboratories and offer online booking of diagnostic tests, as well as home collection of samples to widen their service portfolio. A few players have started their own laboratories with diagnostic services for patients on their e-pharmacy platform. 

Reliance Industries bought out online pharmacy NetMeds in August 2020. NetMeds too offers a suite of diagnostic services. Not to be left behind, the Tata Group took over a digital pharmacy 1mg in June 2021. 1mg also offers diagnostic services. Even Amazon India launched ‘Amazon Pharmacy’ on a trial basis in Bangalore in 2020.  

The Indian diagnostics industry is estimated at Rs 65,000 crore. Although the Indian diagnostic market is still small compared to those in developed countries, it is amongst the fastest-growing segments in the healthcare market. This segment is currently dominated by high volume/low-cost testing activity by most players.

Online pharmacy players are seeking synergies with diagnostic chains whereby platforms are a means for patients to gain access to the physical infrastructure of a diagnostic centre, expanding their market share of the overall market.

Testing for Covid-19 in FY21 increased the scope of services and added to the profitability of each company. While the costs of Covid tests were controlled by the government, the sheer volume of tests made it a favourable proposition for most companies. In FY21, most companies were able to grow their revenues from non-covid tests as well.

According to the latest report by Crisil Ratings, revenues of diagnostics companies are set to rise 17-20% in FY22 as a surge in revenues from regular tests will offset a moderation in revenues from Covid-19 tests because of the price caps progressively imposed since last fiscal. 

The report further states that in FY21, higher volumes and realisations from Covid-19 tests had driven revenue growth, while regular tests were fewer because of lockdown. But in FY22, with the pace of vaccination increasing, revenue from regular tests will recover strongly, while that from Covid-19 tests will get impacted by price caps.

Different models followed by each diagnostic chain

Each player has a differentiated business model, in the type of tests offered and segments that it focuses on.

Dr Lal Path Labs has a robust hub and spoke model (centralized diagnostic testing and clinical laboratories), especially in the north and east markets, as it has strategically positioned its clinical laboratories, patient service centers (PSCs) and pick-up points (PUPs). The business model is asset light and scalable as most of the patient service centers (collection centers) operate under the franchisee model and most of its diagnostic equipment is sourced through reagent (chemicals required for testing) rental agreements. Dr Lal Path Labs has a higher contribution from the B2B segment.

Metropolis Healthcare also works on an asset-light model with around 90% of its centers and 16% of its lab network being leased. The 'laboratory on lease’ model enables the company to lease out the space of other standalone private laboratories and also use the diagnostic equipment. The laboratory is operated according to  Metropolis’ standards, and revenues are shared between the parties involved, while daily operations costs are borne by Metropolis.

Vijaya Diagnostics is the largest integrated diagnostic chain in southern India, The company offers a one-stop solution for pathology and radiology testing services to their customers through an extensive operational network in 13 cities and towns in the states of Telangana and Andhra Pradesh. Nearly 93% of its revenues are driven by B2C or walk-in customers. The risk in such a large percentage of B2C clients comes with potential adverse events denting the credibility of the company.

Krsnaa Diagnostics’ business is focused on providing diagnostic services to the mass segment, particularly in tier II and tier III cities and towns in India, in addition to metros and tier I cities. Its patient base includes large segments of government employees and their families covered under the National Health Scheme. It is almost completely dependent on contracts by different state governments under the PPP model.

The company operates a large teleradiology reporting hub in Pune, which is among the largest in India and equipped with sophisticated equipment and operated by a panel of experts and qualified radiologists that enable it to serve patients in remote locations where diagnostic facilities are limited.

Pan India expansion is a challenge for existing players

Only three diagnostic companies currently have a pan India presence, Dr Lal Path Labs, Metropolis Healthcare, and Thyrocare. This is characterized by strength in the region of their origin. Dr Lal Path Labs is headquartered in Delhi and has more than 50% of its business in north India. Similarly, Metropolis Healthcare began its operations in Mumbai and the western region contributes to 54% of its business. Thyrocare, with its origins in Mumbai, generates one-third of its revenues from western India.


From the newly listed players, Krsnaa Diagnostics has a pan India presence, but this has more to do with its contracts with various state governments under the PPP model (public-private partnership), while Vijaya Diagnostics has a presence in eastern India and more than 90% of its business is done in two southern states.

Thyrocare has built its business on basic wellness tests and specialising in cost-effective pathological biochemical testing. With the change of ownership at Thyrocare and the new management in place, investors are keenly watching the next moves of Thyrocare. This might be a template for other online pharmacies to follow.

While the existing players have either expanded their presence by entering new geographies or acquiring other players, this process is long drawn out, and it takes a few years to build a significant national presence. Setting up labs is a capital-intensive process with break-even periods of up to five years. The technology involved in testing equipment also keeps changing and upgrading technology is a major expense.

The online pharmacies are in a position to consolidate many individual labs under their platform quickly as they can sign agreements with numerous existing individual labs and offer multiple services in each region depending on the testing facilities of these labs. There is no capital expenditure involved for both parties and one can expect many developments over the next few quarters.

For an industry growing at a rapid pace and aggression by online pharmacies to capture market share in diagnostics, the current battle will be in building a large digital footprint and pan India domination, before the competitors can.

Mutual Funds News    
TREND | 20 Sep 2021
Following the monthly fund flows: Fund managers make bets on banks, life insurers and auto component makers

By Ketan Sonalkar

The monthly portfolio disclosures by mutual funds give investors an idea of what the smart money is doing in the market and the sectors and companies that are in vogue or have fallen off the radar for fund managers. This screener shows stocks where mutual funds increased holdings in August 2021. There is growing interest from fund managers in banks, life insurance, auto ancillary manufacturers, and a recently listed specialty chemicals company.

SBI Life Insurance - Revised product mix and strong distribution channels

SBI Life Insurance has the highest market share amongst the privately owned life insurance companies. The company’s Q1FY22 results show that the sales of ULIP (unit-linked insurance plans) picked up, and its share in the overall product mix is showing improving trends. The company is focusing on selling more individual protection and annuity products, with the latter being more profitable. This is expected to add to its VNB (value of new business) margins.

SBI Life possesses the largest bancassurance network among life private life insurers which is critical for this business. It also has tie-ups with UCO Bank, South Indian Bank, and Yes Bank that have strengthened its distribution capabilities. 

Fund managers who increased their holdings in SBI Life

Rajat Chandak and Priyanka Khandelwal bought shares for ICICI Prudential Flexicap Fund Regular Growth scheme, Roshi Jain and Anand Radhakrishnan added shares to Franklin India Focused Equity Fund Growth scheme, Saurabh Pant bought for SBI Large & Midcap Fund Regular Payout Inc Dist cum Cap Wdrl scheme and  Milind Bafna added to  Aditya Birla Sun Life Pure Value Fund Growth scheme.

RBL Bank - Ambitious growth plans for credit cards and housing loans

RBL Bank is a fast-growing private sector bank offering services like corporate and institutional banking, commercial banking, retail banking, etc. The bank swiftly mitigated a major roadblock hit in July this year in its credit card business by signing up Visa for their credit card business. The bank has now resumed issuing credit cards to its new customers.

Earlier, Mastercard was the sole partner for the credit card business. The Reserve Bank of India had banned Mastercard from issuing any new cards on July 14 this year for not complying with data localisation requirements and this completely paused the issue of new cards by the bank. With the matter resolved, and Visa onboard for credit card services, the bank plans to issue 12-14 lakh cards in FY22. Credit cards contribute 37.5% of the retail book for the lender, which has a 5% market share in the segment.

The bank has 4% share of housing loans of its overall retail lending portfolio with a housing loan book of Rs 1,643.0 in FY21. The bank announced plans to add 120 housing finance branches to the existing 66 branches over the next three years with a target of Rs 10,000 crore loan book.

Fund managers who increased their holdings in RBL Bank

The fund managers who increased their holdings in the bank in August 2021 were Yogik Pitti, Harshal Joshi, and Arpit Kapoor through IDFC Arbitrage Fund - Regular Plan - Growth scheme, Sailesh Raj Bhan and Kinjal Desai through Nippon India Multi Cap Fund - Growth scheme, Bhavesh Jain and Dhaval Dalal through Edelweiss Arbitrage Fund Regular Growth scheme and  Shailesh Jain added more share to the Tata Arbitrage Fund Regular Growth scheme.

Lupin - New product launch and expected recovery in US markets

The last couple of quarters were lacklustre for Lupin on account of pricing pressure in the US generics market, where it is the third-largest generic drugs player for prescription drugs. The US markets were also impacted due to supply chain issues in FY21 against the backdrop of the pandemic.

In Q1FY22, formulations sales in the Indian market grew by 27% YoY. The company expects the ramp-up of its drugs Albuterol and Brovana to drive growth in India. The management is also hopeful of launching 10-12 products on an incremental basis in the Indian market.

Luping hopes to overcome hurdles in the US market over the next few quarters. In an interaction with analysts over a conference call after announcing Q1FY22 results, the management guided for EBITDA margins of 17%-18% in H2FY22.

Fund managers who increased their holdings in Lupin

In August 2021, fund managers who bought  Lupin’s shares were Rajat Chandak, Priyanka Khandelwal and Anish Tawakley for the ICICI Prudential Bluechip Fund Growth scheme, Anish Tawakley and Lalit Kumar added shares to ICICI Prudential Business Cycle Fund Regular Growth scheme, Dinesh Balachandran added to SBI Magnum Long Term Equity Scheme Regular Payout of Income Distribution cum capital wdrl scheme, and Hiten Shah through Kotak Equity Arbitrage Fund Growth scheme.         

LIC Housing Finance - Affordable housing presents new opportunities

LIC Housing Finance (LICHFL) is one of the largest housing finance companies in India. It is noteworthy that despite the pandemic, LICHFL continued its streak of recording higher YoY annual revenues for the tenth consecutive year and recorded its highest-ever revenues in FY21 at Rs 19,880 crore.

Triggers that will drive growth include the government’s increased focus on housing, in particular affordable and mid-segment (Units Price -affordable below Rs 40 lakh and mid-segment - Rs 40 lakh to Rs 80 lakh).  Interest rates on home loans too are at an all-time low,  in the range of 6.9%, encouraging home buyers to go for purchase. LICHFL disbursed a total of Rs 55,223 crore in FY21 and 77.9% of this was contributed by the retail home buyers book. 

Another is the tie-up with IPPB (India Posts Payment Bank) for selling housing finance products to its customer base of 4.5 crore, via a network of 650 branches and 1.36 lakh banking access points across India.

Fund managers who increased their holdings LIC Housing Finance

Yogik Pitti, Harshal Joshi and Arpit Kapoor bought shares for IDFC Arbitrage Fund - Regular Plan - Growth scheme, Bhavesh Jain and Dhaval Dalal bought for Edelweiss Arbitrage Fund Regular Growth scheme, Vinay Sharma and Kinjal Desai added shares to Nippon India Banking & Financial Services Fund Growth scheme, and  Rohit Singhania and Charanjit Singh bought for DSP Tax Saver Fund Regular Plan Growth scheme.

Jamna Auto - Recovery in commercial vehicle demand holds the key

Jamna Auto is an auto ancillary company that makes suspensions for commercial vehicles. It is the largest manufacturer of suspension springs in India and the third-largest in the world. The company’s sales are directly dependent on sales of commercial vehicles. In an environment of declining sales of commercial vehicles by almost half over the past two years, the company improved its net profits by 50% in FY21.

The scrappage policy of commercial vehicles announced by the government recently is slated to be a growth driver for the company.  This company is a bet on a recovery in commercial vehicle volumes.

Fund managers who increased their holdings in Jamna Auto

Jamna Auto found buyers in Sankaran Naren, Priyanka Khandelwal and  Harish Bihani for ICICI Prudential Smallcap Fund Growth scheme, Priyanka Khandelwal and Prakash Goel for ICICI Prudential Multicap Fund Growth scheme, Anupam Tiwari and Hitesh Das added to Axis Small Cap Fund Regular Growth scheme, and Pranav Gokhale and Amit Nigam increased their holding in Invesco India Multicap Fund Growth scheme.

 

Minda Industries - Charging up for electric vehicle market expansion

Minda Industries is an auto ancillary company that makes automotive switches, horns, parking sensors, seats, etc. The product portfolio is equally divided between two-wheelers and four-wheelers. The company posted its highest-ever annual revenues in FY21 at Rs 6,421.8 crore, a YoY increase of 16.6%. 

In Q1FY22, the company has won a number of orders from auto manufacturers. These include a Rs 75 crore order from American and European auto manufacturers for seating systems, alloy wheels from a Japanese and a Korean company, LED lamps for Indian and Korean auto companies. The management expects the alloy wheels segment to contribute revenue of Rs 250 crore in FY22 from Rs 80 crore in FY21.

As the next growth phase, Minda is betting big on the growth of electric vehicles and 90% of their products find application in electric vehicles in addition to fossil fuel vehicles. The company is also developing products that would find applications exclusively in electric vehicles.

Fund managers who increased their holdings in Minda Industries

The company found buyers in Sohini Andani via SBI Magnum Midcap Fund Regular Growth scheme, Shriram Ramanathan and Venugopal Manghat via L&T Hybrid Equity Fund Growth, Vihang Naik for L&T Tax Advantage Fund Growth scheme, and Priyanka Khandelwal and Prakash Goel added shares to ICICI Prudential MidCap Fund Growth scheme.

Bank of India - Restructuring, and growing its digital footprint

Bank of India is one of India’s largest public sector banks with a pan India network of over 5,000 branches. In FY21, the bank posted annual net profits of Rs 2,082.8 crore, after consecutive five loss-making years. Its asset quality has shown continuous improvement with the gross NPA ratio at 13.5% in Q1FY22 as against 13.9% in Q1FY21 and 16.5% in Q1FY20. 

The bank is also raising Rs 3,000 crore via a QIP (qualified institutional placement). The purpose of the issue is not only for regular business growth, but also to deploy capital for improving the technology platform of the bank, co-lending digital operations, and tie-ups with fintech companies.

The bank recently entered into a co-lending arrangement with MAS Financial Services for MSME loans. This would aid the bank to build a robust MSME portfolio. The bank is also reported to be one of the four banks shortlisted for privatisation by the central government. Any developments on this front would be a positive for the bank.

Fund managers who increased their holdings Bank of India

Sanjeev Sharma, Vasav Sahgal, and Ankit Pande bought shares through two schemes, Quant Small Cap Fund Growth and Quant Active Fund Growth. Prashant Jain and Sankalp Baid bought shares for HDFC Top 100 Fund Growth scheme, and Milind Bafna added shares to Aditya Birla Sun Life Pure Value Fund Growth scheme. 

Marico - New digital brand strategy to drive new products

Marico is an FMCG (fast-moving consumer goods) company with leadership in hair oils (Parachute) and other products including edible oils, cosmetic products, etc.

Marico is strengthening its digital strategy after having tasted success with one such brand. Last year it acquired men's grooming brand Beardo, which is exclusively sold via online channels. The company expects sales of Rs 100 crore from this brand in FY22. Buoyed by the success of an online brand, it plans to develop a few more online brands over the next few years.

In Q1FY22, the revenues increased YoY from Rs 1,925 crore to Rs 2,525 crore, but net profits declined YoY Rs 388 crore to Rs 365 crore. This was on account of increased raw material prices. The management expects the raw material prices to moderate in Q2FY22 and decline in the second half of FY22 aiding margins for the company.

Fund managers who increased their holdings in Marico

Marico found buyers in Hiten Shah for Kotak Equity Arbitrage Fund Growth scheme,  Shailesh Jain for Tata Arbitrage Fund Regular Growth scheme, Milind Bafna for Aditya Birla Sun Life Pure Value Fund Growth scheme, and Sudhanshu Asthana and Kamal Gada forUTI Focused Equity Fund Regular Growth scheme.   

Coforge - Continued deal wins to propel growth

Coforge is among the top ten Indian IT companies by market capitalization. A solid performer, it has delivered increasing revenues for the past eight quarters. Besides, it has also delivered a strong YoY revenue growth consistently for the last eight years.

Q1FY22 was a record quarter in terms of the size and significance of the deals. It signed three large deals during this quarter. These include a $20 million contract over three years in the insurance space and a $100 million contract over four years in the BFS (banking and financial services) space.

Fund managers who increased their holdings in Coforge

Ajay Tyagi bought shares through UTI Flexi Cap Fund Regular Plan Growth scheme, Shriram Ramanathan and Venugopal Manghatthrough L&T Hybrid Equity Fund Growth scheme, Jinesh Gopani for Axis Long Term Equity Fund Growth scheme, and Manish Gunwani and Kinjal Desai added to Nippon India Flexi Cap Fund Regular Growth scheme.

Tatva Chintan Pharma Chem - Green chemistry focus and expansion plans

Tatva Chintan Pharma Chem (TCPC) is a specialty chemicals manufacturer engaged in the manufacture of chemicals used in pharmaceutical and agrochemical industries. TCPC listed on the exchanges on July 29.

The company has started capacity expansion at the Dahej facility on its existing available land. Approximately Rs 147 crore from IPO proceeds will be used for this purpose. According to the management, this new facility will be available by Q4FY23. Another Rs 23 crore from IPO proceeds is being used for funding capital expenditure requirements for upgradation at the R&D facility in Vadodara.

Their focus on ‘green’ chemistry processes is a factor to consider since worldwide trends in the chemical industry are moving towards green chemistry eliminating or minimising the use of hazardous chemicals in the manufacturing process.

The specialty chemicals space is one of the fastest-growing sectors in India and fund managers look keen to invest even in the new entrants. The stock of TCPC on its listing debut delivered 95% listing gains for investors over the issue price of Rs 930 per share. It is currently trading at Rs 2105 per share in the second week of September.

Fund managers who bought Tatva Chintan

This newly listed company found buyers in Sohini Andani through SBI Magnum Midcap Fund Regular Growth scheme, Manish Gunwani and Kinjal Desai for Nippon India Flexi Cap Fund Regular Growth scheme, Mahendra Kumar Jajoo, Harshad Borawke, and Vrijesh Kasera bought for Mirae Asset Hybrid Equity Fund -Regular Plan-Growth scheme and Vrijesh Kasera added to Mirae Asset Healthcare Fund Regular Growth scheme.

Prabhudas Lilladhar released a Economy Update report for Mutual Funds News on 20 Nov, 2021.
705.30
1.65%
Is the acquisition of Exide Life by HDFC Life a win-win deal?

By Ketan Sonalkar

The pandemic woke many people up to the importance of life cover in FY21 and has changed the dynamics of the life insurance industry. Not only did most life insurance companies issue the highest number of new policies during the last financial year, but they also settled a huge ...

PremiumThis is a premium article. Click here to read.

HDFC Life Insurance Company Ltd.'s price crossed above SMA30 today